Av­er­age U.S. gas prices above $2 af­ter climb­ing for 21 con­sec­u­tive days

The Calvert Recorder - Southern Maryland Automotive Trends - - News -

The na­tional av­er­age price of gas climbed above $2 per gal­lon on March 24 for the first time in 2016, and av­er­age prices have in­creased for 21 con­sec­u­tive days, says AAA.

Mon­day’s av­er­age price of $2.04 per gal­lon was up six cents per gal­lon on the week and 30 cents per gal­lon for the month. De­spite the re­cent in­crease, av­er­age gas prices re­main 39 cents per gal­lon less than a year ago.

Many re­finer­ies are con­duct­ing sea­sonal main­te­nance, which has led to a de­cline in fuel pro­duc­tion, AAA ex­plains. In ad­di­tion, re­finer­ies are pre­par­ing to pro­duce sum­mer-blend gaso­line. This blend of gaso­line, man­dated by the EPA, is less prone to evap­o­rate and con­trib­ute to air pol­lu­tion in warmer tem­per­a­tures. Re­tail­ers in many parts of the coun­try are re­quired to sell this sum­mer-blend of gaso­line by June 1, and lead­ing up to this dead­line, re­finer­ies and stor­age fa­cil­i­ties also ad­just their sup­ply in or­der to com­ply with the reg­u­la­tion.

Dur­ing the months of March and April, re­finer­ies will be­gin the tran­si­tion to pro­duc­ing and stor­ing sum­mer-blend gaso­line, and of­ten “sell-off” or “draw­down” on their ex­ist­ing sup­ply of gaso­line in or­der to make room for this sea­sonal gas. This re­duc­tion in sup­ply of­ten leads to higher prices at the pump, be­cause dur­ing this tran­si­tion pe­riod, de­mand for gaso­line gen­er­ally be­gins to in­crease as warmer tem­per­a­tures motivate more driv­ers to take to the roads.

Cal­i­for­nia ($2.77) re­mains the na­tion’s most ex­pen­sive mar­ket for re­tail gaso­line, and in­ven­to­ries in the state re­port­edly fell to an 11-week low due to on­go­ing re­fin­ery chal­lenges and in­creased de­mand. Con­sumers in sec­ond-place Hawaii ($2.56) are pay­ing 21 cents per gal­lon less than the mar­ket leader, and re­gional neigh­bors Ne­vada ($2.41), Alas- ka ($2.29) and Wash­ing­ton ($2.28) round out the top five most ex­pen­sive mar­kets for gas. On the other end of the spec­trum, New Jersey ($1.83) and Mis­souri ($1.85) are the na­tion’s least ex­pen­sive mar­kets.

Re­tail av­er­ages in the vast ma­jor­ity of states (47) are higher on the week, and con­sumers in 28 states and Wash­ing­ton, D.C., are pay­ing a nickel or more per gal­lon at the pump ver­sus one week ago. Gas prices are up dou­ble dig­its in five states with the largest weekly in­creases ex­pe­ri­enced by driv­ers in Ari­zona (+14 cents), New Hamp­shire (+11 cents), Mas­sachusetts (+11 cents) and Con­necti­cut (+11 cents). Prices have fallen over this same pe­riod in three states, but in less dra­matic fash­ion. Av­er­ages are down on the week in Michi­gan (-6 cents), North Dakota (frac­tions of a penny) and Min­nesota (frac­tions of a penny).

With the ex­cep­tion of Hawaii (-1 cents), con­sumers na­tion­wide are pay­ing more to re­fuel their ve­hi­cles month-over-month. The av­er­age price at the pump is up by a dime or more per gal­lon in the vast ma­jor­ity of states (48) and Wash­ing­ton, D.C. on the month, and mo­torists in 35 states are pay­ing av­er­ages that are up by a quar­ter or more per gal­lon over this same pe­riod. The big­gest jumps in price have been in states west of the Rockies: Ari­zona (+52 cents), Ne­vada (+44 cents), and Cal­i­for­nia (+40 cents).

De­spite ris­ing av­er­ages, con­sumers na­tion­wide con­tinue to see yearly sav­ings at the pump. Driv­ers in 47 states and Wash­ing­ton, D.C., are sav­ing more than a quar­ter per gal­lon when they re­fuel their ve­hi­cles, and av­er­ages are down more than 50 cents in a to­tal of six states com­pared to this same date last year. Year-over-year, the largest sav­ings in the price of gas are in Alaska (-63 cents), Illi­nois (-61 cents) and Ore­gon (-59 cents).

Vary­ing ex­pec­ta­tions of fu­ture sup­ply and de­mand have con­trib­uted to the global oil mar­ket’s over­all volatil­ity. As a re­sult, the global price of crude oil con­tin­ues to see­saw on news re­lated to po­ten­tial mar­ket in­flu­encers, and many traders are fo­cused on the up­com­ing meet­ing be­tween the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries and non-OPEC pro­duc­ers sched­uled for April 17.

An over­all bear­ish sen­ti­ment per­sists and mar­ket fun­da­men­tals con­tinue to point to over­sup­ply. De­spite on­go­ing talks, there is per­sis­tent skep­ti­cism re­gard­ing the prospects for re­duc­tions or freezes in pro­duc­tion, and crude oil prices are likely to con­tinue to re­main volatile in the near-term.

West Texas In­ter­me­di­ate crude oil opened the week trad­ing a bit higher, fol­low­ing a week of fluc­tu­at­ing prices due to news of in­creas­ing crude oil in­ven­to­ries bal­anced against re­ports of fall­ing rig counts in the United States. The NYMEX was closed last Fri­day in ob­ser­vance of Good Fri­day, and WTI closed out last Thurs­day’s for­mal trad­ing ses­sion on the NYMEX down 33 cents and set­tled at $39.46 per bar­rel.


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